‘Revised’ U.S. South Korea Trade Agreement is ‘Same-Same’

Arthur J. Villasanta – Fourth Estate Contributor

Washington, DC, United States (4E) – Donald Trump’s first signed trade deal, the recently renegotiated United States-Korea Free Trade Agreement (KORUS FTA), is practically the same deal as the original one that went into effect in March 2012 — but with only a few major tweaks.

Trump and South Korean President Moon Jae-in signed the revised KORUS FTA on Sept. 24 to much fanfare. Trump earlier called the deal “very important,” while Moon described it as “significant.”

The amended KORUS FTA won’t boost U.S. car sales to South Korea, as Trump boasts. That’s because Americans love South Korean cars while South Koreans despise American cars, in part because they like European-made cars even more.

But the new agreement will exempt South Korea from the U.S.’ 25 percent tariff on global steel imposed in May. Instead, South Korea accepted a quota to limit steel exports to the United States to 70 percent (about 2.68 million metric tons) of what it was selling before.

In addition the revised agreement extends a 25 percent U.S. tariff on imported Korean trucks. It also lifts a cap on U.S. car exports to South Korea that don’t need to meet Korean safety standards, which are far stricter than America’s. Apart from these, the new KORUS FTA is almost unchanged from the old one as far as major changes go.

Analysts said the agreement seems like a win for the U.S. auto industry, but concede the deal won’t change the fact South Koreans don’t want to buy American cars. “It hardly seems like it will have an impact,” says Simon Lester, a trade policy expert at the Cato Institute. “I think (the Trump administration) needed to declare a victory, to just do something and sell it as a win.”

But the biggest factor in the trade imbalance in favor of South Korea is related to car sales, and this is irritating the Trump administration no end. In 2016, Americans imported $16 billion worth of Korean cars, or about 10 times more than the $1.5 billion South Koreans spent importing American cars. That ratio will likely stay the same despite the revised KORUS FTA.

The new deal also won’t do much to close America’s $27 billion goods trade deficit with South Korea in 2016. This was the main reason whyTrump decided to renegotiate the original trade deal in the first place.

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